Release Date: August 15, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- GEE Group Inc (JOB, Financial) has a strong balance sheet with substantial liquidity, including $19.6 million in cash and no outstanding debt.
- The company is actively pursuing M&A opportunities to drive growth and expects to complete accretive transactions within the remainder of this calendar year and in fiscal 2025.
- Management is taking aggressive actions to streamline operations and reduce SG&A expenses by an estimated $3 million annually.
- The company is migrating and integrating legacy systems onto singular cloud-based platforms to achieve economies of scale and improve operational efficiency.
- GEE Group Inc (JOB) is confident in its ability to restore growth and profitability, leveraging its strong cash position and strategic initiatives.
Negative Points
- Consolidated revenues for the quarter and year-to-date were down 23% and 25%, respectively, compared to the prior-year periods.
- The company reported a net loss of $19.3 million for the quarter and $21.8 million year-to-date, primarily due to non-cash impairment charges.
- Adjusted EBITDA was negative $400,000 for the quarter and negative $1.2 million year-to-date, indicating ongoing financial challenges.
- The demand environment for staffing services remains difficult due to macroeconomic uncertainty, interest rate volatility, and inflation.
- Direct hire revenues were down 37% for the quarter and 44% year-to-date, reflecting a significant decline in this high-margin segment.
Q & A Highlights
Q: Can you describe and define accretive as it pertains to acquisitions?
A: Accretive acquisitions are those that are profitable from the start or very shortly after and add to our earnings per share and EBITDA. β Kim Thorpe, CFO
Q: Why has insider buying been so small this year?
A: Insiders already own a significant amount of stock, and we've been in a blackout period. Insider buying will be considered once the blackout period ends. β Kim Thorpe, CFO
Q: What was the reasoning behind the strategic review recommending acquisitions over buybacks?
A: Buybacks do not foster long-term growth. Acquisitions grow earnings and business, and it's a good time to look at acquisitions due to favorable multiples. β Kim Thorpe, CFO
Q: Do you see the market improving before the second quarter of 2025?
A: We believe the market will show signs of recovery by the second quarter of 2025. We are not waiting for recovery and are actively managing our business to restore profitability. β Derek Dewan, CEO
Q: What would be a catalyst for the stock to move higher in the near to midterm?
A: Better company performance, return to profitability, a brighter outlook, and a better industry backdrop will contribute to stock movement. β Derek Dewan, CEO
Q: Have you been approached by larger companies pursuing an acquisition?
A: We receive inquiries from time to time, and any meaningful opportunities will be reviewed by the directors and senior management. β Derek Dewan, CEO
Q: How much influence does technology have in reducing operating expenses, and is GEE looking to be more technology-driven?
A: We are integrating AI tools and streamlining operations with updated cloud-based systems to improve efficiency and productivity. β Kim Thorpe, CFO
Q: What favorable conditions are required to grow the company?
A: A favorable economy and a robust labor market are essential. Our business thrives on economic activity and movement in employment. β Derek Dewan, CEO
Q: Why not buy back shares if the stock is undervalued?
A: It's not prudent to buy back shares when cash flow is negative. We are focused on restoring profitability and will consider buybacks when conditions improve. β Derek Dewan, CEO
Q: What is your 5- to 10-year business vision and outlook?
A: We have a strategic plan looking forward, focusing on organic growth and strategic acquisitions to achieve long-term objectives. β Derek Dewan, CEO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
